Raso v. Lago, 97-1279

• Citation: 135 F.3d 11
• Decision Date: 05 September 1997
• Docket Number: No. 97-1279,97-1279
• Parties: Alfred RASO, et al., Plaintiffs, Appellants, v. Marisa LAGO, et al., Defendants, Appellees. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 11

135 F.3d 11

Alfred RASO, et al., Plaintiffs, Appellants, v. Marisa LAGO, et al., Defendants, Appellees.

No. 97-1279.

United States Court of Appeals, First Circuit.

Heard Sept. 5, 1997.

Decided Jan. 27, 1998.

Chester Darling, Boston, MA, for appellants.

Saul A. Schapiro, Boston, MA, with whom Nina F. Lempert, Hopkinton, MA, Thomas Bhisitkul, Miles, MI, Rosenberg & Schapiro, Boston, MA, Merita Hopkins, Corporation Counsel, Kevin S. McDermott and Amanda P. O'Reilly, Assistant Corporation Counsel, City of Boston Law Department, Boston, MA, were on briefs, for appellees Marisa Lago, Director of the Boston Redevelopment Authority, the Boston Redevelopment Authority, Thomas A. Menino, Mayor of Boston, City of Boston, Victoria L. Williams, Director of the Boston Fair Housing Commission, Boston Fair Housing Commission, Sandra Henriquez, Director of the Boston Housing Authority and Boston Housing Authority.

Rudolph F. Pierce with whom Lynne Alix Morrison, David W. Fanikos, Goulston & Storrs, P.C., Richard M. Bluestein, Paul Holtzman and Krokidas & Bluestein, Boston, MA, were on brief, for Robert H. Kuehn, Jr., President of Keen Development Corp., and as Trustee of the Lowell Square Nominee Trust, Keen Development Corp., Reverend Michael F. Groden, Director of the Planning Office for Urban Affairs, Inc., and as Trustee of the Lowell Square Nominee Trust, Planning Office for Urban Affairs, Inc., Lowell Square Associates Joint Venture, Lowell Square Cooperative Limited Partnership, Mark Maloney, President of Maloney Properties, Inc., and Maloney Properties, Inc.

Susan M. Poswistilo, Assistant United States Attorney, with whom Donald K. Stern, United States Attorney, Boston, MA, was on brief, for Henry G. Cisneros, Secretary of the Department of Housing and Urban Development and Department of Housing and Urban Development.

Before SELYA, BOUDIN and STAHL, Circuit Judges.

BOUDIN, Circuit Judge.

The plaintiffs in this case are former residents of Boston's Old West End who were forced to relocate when their homes were taken by eminent domain for urban renewal. They claim that Massachusetts law entitles them to first preference for tenancy of all new residential units built on the land, and that they are being denied this preference in a new development called West End Place because most former West Enders are white. The district judge dismissed the complaint, leading to this appeal.

The background facts are undisputed. In May 1956, the Boston Housing Authority, the forerunner to the current Boston Redevelopment Authority ("the BRA"), ¹ prepared a plan for urban renewal of Boston's Old West End, a downtown neighborhood lying just north of Beacon Hill. The plan was approved as required under Massachusetts law, and in 1958, the BRA ordered a taking by eminent domain of a large area, displacing over three thousand households of diverse heritages, but including few African Americans.

The BRA executed a lease agreement with a private developer, Charles River Park, Inc. ("Charles River"). Over the next ten years, Charles River razed buildings in the Old West End and built offices, condominiums, and luxury residential units. The new buildings were either nonresidential or so expensive that very few of the former West Enders could afford to occupy them.

In 1970, the BRA terminated Charles River as the project developer and, in 1986, solicited proposals for the development of Lowell Square, located at the intersection of Lomasney Way and Staniford Street, the only remaining large undeveloped section of the Old West End. A proposal was submitted by the Lowell Square Cooperative Limited Partnership (the "developer") to build a new development called West End Place at Lowell Square. ²

The BRA eventually awarded the developer the redevelopment contract. One restriction in the agreement between the BRA and the developer mirrors a provision of Massachusetts law requiring the BRA to obligate the developer as follows:

(c) to give preference in the selection of tenants for dwelling units built in the project area to families displaced therefrom because of clearance and renewal activity who desire to live in such dwelling units and who will be able to pay rents or prices equal to rents or prices charged other families for similar or comparable dwelling units built as a part of the same redevelopment; and

(d) to comply with such other conditions as are deemed necessary to carry out the purposes of this chapter, or requirements of federal legislation or regulations under which loans, grants or contributions have been made or agreed to be made to meet a part of the cost of the project.

Mass. Gen. Laws ch. 121B, § 49 (1986).

The BRA also required that the developer work closely with former West Enders in developing the property. To that end, a number of former West Enders formed the Old West End Housing Corporation. This nonprofit entity and the developer signed a participation agreement, which stated, inter alia, that former West Enders would have first preference in the purchase or rental of residential units in West End Place, subject to applicable local, state, and federal laws.

The developer sought out numerous sources of financing, including government funding from local, state, and federal agencies. In particular, the federal Department of Housing and Urban Development ("HUD") funded a grant of $2.5 million for construction, and it also committed $7 million in rent subsidies for the low-income units in West End Place. See 42 U.S.C. § 1437f (1994). Like most federal housing assistance, these funds were contingent on compliance with federal fair housing requirements. See 24 C.F.R. §§ 1.5, 5.105 (1997).

One such requirement is that developer recipients of federal housing funds must carry out an affirmative program to attract minority, as well as majority, applicants; the pertinent regulation contemplates mailings to minority organizations, assurances of nondiscrimination, and like measures. Each applicant is required to set forth its "affirmative fair housing marketing plan" on a HUD form and secure its approval by HUD. See 24 C.F.R. § 200.620 (1997).

In addition, HUD is subject to a 1991 consent decree based on a finding that HUD had failed to meet statutory obligations to ensure that the minority population of Boston had equal access to public housing. NAACP, Boston Chapter v. Kemp, No. 78-850-S (D.Mass. Mar. 8, 1991) (consent decree). The consent decree provides that all Boston area HUD affirmative fair housing marketing plans "shall have as their goal and measure of success the achievement of a racial composition, in HUD-assisted housing located in neighborhoods which are predominantly white, which reflects the racial composition of the City [of Boston] as a whole." Id. at 2. ³

In preparing its affirmative fair housing marketing plan, the developer attempted to reconcile the explicit statutory obligation of a first preference for former West Enders with HUD's consent-decree goal of a tenancy reflecting the makeup of the City of Boston. Minority races made up 41 percent of Boston's population, but according to HUD's estimate, only about 2 percent of the former West Enders. HUD indicated that it viewed an unqualified preference for former West Enders as contrary to federal fair housing requirements and the consent decree.

The developer, the government agencies, and the Old West End Housing Corporation submitted the matter to mediation. The mediator, a former United States Attorney for Massachusetts, proposed that former West Enders receive a preference as to 55 percent of the units in West End Place, and all other applicants have equal access to the remaining 45 percent. The developer and the agencies agreed; the Old West End Housing Corporation did not. Nevertheless, the mediator's solution was included in the developer's affirmative fair housing marketing plan, which HUD approved in 1996.

The plan operates as follows. West End Place contains 183 residential units that fall into three rent-based categories: 58 "low-income" units (subsidized by HUD funds), 48 "moderate-income units," and 77 units to be rented at market rates. Under the plan, the developer is to give former West Enders first preference as to 101 of 183 units, that is, 55 percent of the total. These 101 units are unevenly distributed over the three rent categories: former West Enders have a preference as to 19 low-income units (33 percent), 24 moderate-income units (50 percent), and 58 market-rate units (75 percent).

The tenant selection works by lottery. Each preliminary application is assigned a random number. The applications are then separated into two pools: pool A contains applications from displaced former West Enders and pool B contains all other applicants. Then, for the low-income units, the top-ranked applicant from pool A is selected, followed by the two top-ranked applicants from pool B; this yields a total of 33 percent pool A applicants (33 percent former West Enders) in the low-income units. The process is then repeated until all 58 units are tentatively allocated.

The same lottery approach is used for the other two categories of apartments. For moderate-income units, the draw ratio is one-to-one (50 percent former West Enders); for the market-rate units, three-to-one (75 percent former West Enders). Applicants who have been selected in this process are then invited to complete a full application and undergo a more thorough screening process, which can include verifications of personal references and credit history. The same process can supply additional applicants if needed.

From August 26 to September 26, 1996, a real estate manager hired by the developer coordinated community outreach efforts to stimulate preliminary applications. The manager also contacted former West Enders as well as the Old West End Housing Corporation. The manager eventually received 1,858 timely preliminary applications, 308 of which identified the...